Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.

Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive earnings surprises.

2 Stocks to Add to Your Watchlist

The Zacks Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate. The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction.

The last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to look at a qualifying stock. Home Depot (HD) holds a Zacks Rank #2 at the moment and its Most Accurate Estimate comes in at $3.26 a share 13 days away from its upcoming earnings release on February 25, 2025.

HD has an Earnings ESP figure of 6.02%, which, as explained above, is calculated by taking the percentage difference between the $3.26 Most Accurate Estimate and the Zacks Consensus Estimate of $3.08.

HD is one of just a large database of Retail-Wholesale stocks with positive ESPs. Another solid-looking stock is Wayfair (W).

Wayfair, which is readying to report earnings on February 20, 2025, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $0.09 a share, and W is eight days out from its next earnings report.

The Zacks Consensus Estimate for Wayfair is $0.01, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 924.25%.

HD and W's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.

Find Stocks to Buy or Sell Before They're Reported

Use the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>

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The Home Depot, Inc. (HD) : Free Stock Analysis Report

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